By: Jackson Clay, Editor-in-chief
IPNews-Monrovia: President George Manneh Weah says that Liberia’s debts have increased significantly as at December 2019 in the tone of One point Twenty-Seven Billion United States Dollars (US$1.27 billion).
Making the disclosure Monday, January 27, 2020 when he delivered his third State of the Nation‘s address as President of Liberia to the legislature, President Weah said that this is because the country has had to finance major infrastructure projects over the last several years.
“The Government’s public debt has increased, largely because the country has had to finance major infrastructure projects over the last several years. As at end-December 2019, the total stock of public debt amounted to One point Twenty-Seven Billion United States Dollars (US$1.27 billion),” President Weah noted
The Liberian leader stated that this represents an increase of Two Hundred and Eighty-Two Million United States Dollars (US$282 million) or Twenty-Eight point Five percent (28.5 %) of the country’s debt stock, compared to the Nine Hundred and Eighty-Seven point Eight Million United States dollars (US$987.8 million) recorded at the end of 2018.
President Weah indicated that of the total debt stock, the share of domestic debt is Four Hundred and Nineteen point Eight Million United States Dollars (US$419.8 million), while external debt accounts for Eight Hundred and Forty-Nine point Ninety-Nine Million United States dollars (US$849.99 million).
“The increase in the debt stock was mainly driven by disbursements from the World Bank , the African Development Bank, the International Fund for Agricultural Development, the Saudi Development Fund, and other creditors which totaled One Hundred and Twenty-nine point Five Million United States dollars (US$129.5 million). These were loans signed and ratified by the previous administration,” he said.
The Liberian Head of State voiced that as part of the Internal Monetary Fund (IMF)-supported program, the Government of Liberia has now fully reconciled and rationalized all Government obligations to the Central Bank of Liberia, noting, as of January 1, 2020, total government debt to the Central Bank of Liberia has been put at Four Hundred and Eighty-Seven Million United States dollars (US$487 million).
He clarified that approximately Seven point Eight percent (7.8%) of this amount, or Thirty-Eight Million United States dollars (US$38 million), represents borrowing by the his administration in the previous two fiscal years and that his Government has agreed to pay interest at the rate of Four percent (4%) per annum to the Central Bank on the principal amount owed, with a grace period of 10 years on principal payment.
He stressed that another major driver of the increase in debt stock was the effort by the Coalition for Democratic Change (CDC) led administration to consolidate accrued obligations by State-Owned Enterprises, and exposure to local commercial banks totaling One Hundred and Eighteen point Five Million United States dollars (US$118.5 million).
“These include NASSCORP, and seven commercial banks, including LBDI, Afriland Bank, Ecobank, IB Bank, UBA, GN Bank and GT Bank.
Debts owed to the commercial banks include longstanding government obligations of Sixty-Five point Two Million United States dollars (US$65.2 million) which was the result of pre-financing of Government’s Heavy Fuel Oil infrastructure projects; Government’s guarantee to the Rubber Planters Association of Liberia in 2014; direct payments made on behalf of the Government, and loans given to companies for pre-financing of various Government infrastructure projects,” President Weah added
President Weah asserted that the domestic debt profile given does not include domestic debt owed to vendors and businesses who have supplied goods and services to the Government over the years.
He vowed that his Administration would conduct a new round of audits in 2020 to determine a rationalized and fully-reconciled domestic debt figure so as to complete the country’s domestic debt profile.
He assured Liberians that a payment framework would be developed after this reconciliation, which may include packaging the debt as a bond for issuance to local and international financial markets.
“Unless domestic revenue significantly improves, meeting our debt service obligations will remain a challenge. This is because many of our external concessional loans have a 5-year grace period on payment of principal. These principal payments are coming due in the next year since the grace period has expired,” he said
He furthered that due to the large stock of public debt the CDC led government has been ability to borrow to finance new investments has been limited.
Meanwhile, President Weah asserted that with these foundations in place, he sees no reason why the year 2020 cannot see positive growth, adding, his government would work with determination, vigor, and focus, to stabilize the macro-economy, reduce inflation and put Liberians to work in agriculture and other key sectors.
